Chesapeake Energy To Raise $1 Billion In Stock Offering

Oklahoma City, OK (AHN) - Chesapeake Energy Corp. filed a registration on Wednesday with the Securities and Exchange Commission enabling the company to offer up to $1 billion in stock as it looks to raise cash for drilling and exploration projects.

The natural gas company said along with drilling and exploration, funds will be used for capital expenditures and other general corporate purposes.

Chesapeake also filed a second registration that will allow the sale of an additional 50 million shares, worth up to $791 million.

The news was released after the market closed Wednesday, shares of Chesapeake fell 3 percent to $19.65 in after hours trading.

Chesapeake has already been raising capital through asset sales. The company just completed a sale of 32.5 percent of its Marcellus Shale interest to Statoil, a Norwegian company, for $3.35 billion.

The company is using alternative avenues to raise cash as its credit facilities are nearly tapped out. Chesapeake has roughly $251million in available credit.

Falling prices for natural gas have certainly not helped the company's cash position. Although cash flow is above levels from last year, falling gas prices can quickly alter that state.

Chesapeake has been able to reduce its exposure to price in the coming year; 73 percent of its 2008 natural gas reserves are hedged, while hedges cover 67 percent of production expected in 2009.

Shares of Chesapeake have fallen 70 percent over the past several months as the price of oil and natural gas dropped to new lows.